Hawala/IVTS Networks

As the Financial Services industry discovered in 2008, when push comes to shove, contractual agreements cease to be worth the paper on which they are written, above all because the evaporation of mutual trust. Can this alarming source of risk be remedied? And if so, how?

Published in Financial World, this brief article explains why the why the thriving hawala network of money transfer is so popular with the poor, and shows how its success is built on the success of m word is my bond

A historically rooted comparision of the respective logistical and systemic merits of Hawala-style trust based coalitions of reciprocity as vehicles for he implementing transjurisictional value transfers, as opposed to those deployed in the more formally constituted contractually grounded systems routinely deployed in in contemporary Euro-American contexts.

Delivered at The International Money Transfer and Migrant Remittances Summit, Rome, 2nd – 3rd July 2009, this paper explores the sources of the competive advantages which 'informal' value transfer systems currently enjoy in comparision with their more formally constituted rivals, and in so doing begins to query the kinfd of regulatory regime with which value transfer operators in general might be more appropriately be required to comply.

Presented at a workshop at the Centre for the Study of Financial Innovation, this explores the logistical solutions deployed within contemporary Hawala-style value transmission systems. It suggests that those frustrated by the lack of an effective global payments system for retial customers may well find that they have much to learn from the procedures and practices which have been developed by the Exchange Houses of Dubai.

Response by the Director of CASAS to HM Treasury's Consultation on The Regulation of Money Services Businesses
Roger Ballard dissects the Treasury proposals for upgrading the UK's current regulartory structure for MSBs in the light of his knowlledge of the operation of conteporary IVTS/Hawala system, as well as an an analyis of developments in the USA which has been set out by Nikos Passas in a recently published article entitled "Fighting Terror with Error: the counter-productive regulation of informal value transfers". Dr. Ballard reaches equally sceptical conclusions about UK regulatory efforts in this field.

Hawala: criminal haven or vital financial network? - by Roger Ballard
Within days of the 9/11 attacks, American authorities prepared to wage war on terror on both financial and military fronts. As the Taliban fled Kabul in the face of advancing American forces, U.S. Treasury Secretary Paul O’Neill announced he was forging a global alliance through which ‘we are going to pursue the financiers of terrorism like they’ve never been pursued before’. His target, however, was as shadowy as al-Qaida itself: the informal system of international money transfer known as Hawala.

Coalitions of Reciprocity and the Maintenance of Financial Integrity within Informal Value Transmission Systems: The operational dynamics of contemporary hawala networks - by Roger Ballard
A comprehensive overview of the development of contemporary IVTS networks operating within a hawala format, exploring the way in which coalitions of reciprocity are utilized to underwrite system security within such networks, such that they work smoothly and efficiently despite the absence of external administrative and legal regulation. Challenging widespread fears that such networks are acutely vulnerable to the financiers of terrorism and those repatriating the profits of drug smuggling, the paper concludes that coalitions of reciprocity owe their competitive advantage over formally consituted banks not because of their inherent criminality, but because they provide a more cost-effective means of facilitating long-distance value-transmission than the sclerotic and top-heavy administrative procedures routinely deployed by their competitors.

Delivering Migrant Remittances: the logistical challenge - by Roger Ballard
As globalization has led to ever higher levels of labour mobility, so the volume of funds remitted to their families by workers employed in countries far distant from their homes has increased by leaps and bounds. The total volume of such transfers currently amounts to over $100 billion per annum, the greater part of which flows from economically advanced regions in the West and North to developing countries in the East and South. Delivering those funds swiftly, reliably and cheaply to relatively remote destinations opens up new opportunities for the financial services industry, but also represents a major logistical challenge.

The Principles and Practice of Hawala Banking - by Roger Ballard
This is an edited version of an expert report prepared for the de fence in one of the many 'Hawala'/money laundering prosecutions currently being mounted by UK Customs and Excise.